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William O'Keefe
CEO, George C. Marshall Institute

William O'Keefe

William O'Keefe is CEO at the George C. Marshall Institute, a think tank that promotes better use of science in public policy. He is a former COO at the American Petroleum Institute. ALL POSTS

Let competition choose energy sources

Q: Are Obama's proposed $36 billion loan guarantees for nuclear plants a smart option?

If private companies are unwilling to risk their capital on new nuclear plants, why should the tax payer take on part of that risk? The answer is we shouldn't.

Moody's has looked at some individual company investment plans and concluded that they represent a "bet the farm" strategy. The U.S. taxpayer has been subsidizing nuclear power since its inception and it has yet to achieve its potential. Some of this is the fault of government policy but some of it is just plain economics. The cost of new nuclear plants has been estimated to be on the order of $4 billion dollars with some estimates being over $10 billion when cost over runs are taken into account. That makes the cost of nuclear produced electricity very high.

The Obama Administration is promoting nuclear power because it does not involve CO2 emissions. But, that is only one criteria and it should be judged on a cost-benefit basis. How much would new plants coming on line over the next two decades reduce the climate change risk? And, are there more cost-effective alternatives for reducing that risk? There is growing evidence that the risk of climate change has been exaggerated and that certainly weakens the case of the Administration.

At a time of trillion dollar deficits and a national debt of historic proportions, the Federal Government needs to take a step back and reassess all of its programs and policies. Our fiscal crisis is far greater and far more certain than a climate apocalypse later this century. Part of solving that crisis is getting the economy on a robust growth path. That should involve taking a hard look at all subsidies, eliminating pork, setting in place a sound fiscal, streamlining our regulatory system, and adopting a long term and coherent energy policy.

Abundant and cost-competitive energy without subsidies to tilt the playing field toward any energy sources is in our national interest. As a nation, we cannot afford to turn our back on fossil energy which the Department of Energy projects will continue to be our dominant source of energy for decades to come. Producing domestic oil will reduce the growth in imports and increase investment and jobs here. And, taking advantage of the abundance of the recently increased supply of natural gas can enable us to meet our electric power needs at a lower cost than nuclear while reducing CO2 emissions.

The role of the government should not be to pick winners for future energy sources; it should be to provide clear and consistent rules for competition, an environment that encourages private investment, and support for basic research that can produce the low or no carbon energy systems of the future.

By William O'Keefe  |  February 11, 2010; 11:13 AM ET Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
Previous: A policy-in-waiting for a serious climate-change program | Next: Nuclear energy in Obama's budget

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Competition never created anything nuclear so far. The Manahatten Project wasn't made by private industry. By it's very nature, anything nuclear will always require government to control it's security.

Check out what Obama means by next generation of safer, cleaner, more efficient nuclear reactors before you make up your mind all things nuclear are bad.

http://www.youtube.com/watch?v=EHdRJqi__Z8&feature=related

When will we start thinking outside the box? There are other types of reactor designs possible, besides the meltdown prone, fuel wasting, antique model T clunkers we build today.

Posted by: fabco | February 17, 2010 5:21 PM
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Private industry wasn't big on investing in space technology back in the 1960s, but that doesn't seem to hold them back from profiting from all the spin-off technology today.

Posted by: slim2 | February 14, 2010 10:19 AM
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We need to quit thinking of Nuclear waste as waste. It is fuel that didn't get burned in our antique reactors. The only waste here is the waste of that much energy that didn't get used.

Yucca mountain is not the solution here. How is infinite storage of an energy source a million times more powerful than fossil fuel until it is totally unusable a solution to anything but more waste and a crying shame?

Burning that fuel in a newer type of reactor to produce Energy we don't have to import from the Middle East is the solution, not Yucca Mountain.

Posted by: fabco | February 14, 2010 10:13 AM
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I wish your premise was equally applies. How did that whole ethanol thing work out? Government should not inhibit or incentive any energy production. Let's drill and also invest in alternative energy based upon risk/return!

Posted by: pauldia | February 14, 2010 9:45 AM
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Agreed, let's drop ALL subsidies. Let the oil industry guard the Persian Gulf, let the coal industry pay for its toxic waste cleanups and black lung liabilities, and let the nuclear industry find its own construction financing, catastrophic risk insurance and waste disposal solution. No question, in that environment, renewable energy is by far the most affordable option. -- Bill Kovarik

Posted by: wkovarik | February 14, 2010 9:27 AM
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Yeah, let's continue to put all our eggs in the lowest current/short term cost option and let the marvelous free market dictate long term policy.

Sounds a lot like those who were championing the marvels of credit default swaps, mortgage backed security options and leveraged hedge fund investments. How did they work out for the nation and its middle class.

this guy is such an obvious shill for big oil it is ridiculous. Anyone who might consider his analysis and bottom line conclusion is probably among those whd signed on the dotted line for no down payment zero interest mortgages. How did the free market work for them.

Let's keep denying reality. It is going to be one hell of a party until our kids figure out how irresponsible we have been.

Posted by: bobfbell | February 14, 2010 8:43 AM
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Wind and solar are also heavily subsidized by the Federal government in the form of tax credits. A loan guarantee is a completely different financial incentive. It gives the builder a shot at lower interest loans to finance the building. The Federal government does not have to pay anything out unless the project fails. This is why the current $18B in loan guarantees has not been awarded. DOE want to ensure that ONLY PROJECTS THAT WILL SUCCEED GETS THE LOAN GUARANTEE along with thinking about whether to support all or only a portion of the financing.

Bottomline is that to ensure diversity of energy sources for higher reliability and the chance to move away from fossile fuels, virtually all non-fossile fuel energy sources will need some form of governement support either as tax credits or as loan guarantees in the short term.

Posted by: ARickoverNuke | February 13, 2010 5:18 PM
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Bogus-- so we should be investing in dinosaur fuel instead? not a surprising argument from the former head lobbyist for the oil industry.

Posted by: hyperbanana | February 13, 2010 2:56 PM
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OKeefe is correct in his call for developing our own resources for oil and gas- we will continue to heavily rely on them for a few decades.
It is only sensible to use our home-grown supplies instead of shipping untold billions overseas when we could keep that money at home.

I do disagree with his somewhat eclectic attack on nuclear power though.
While nuclear is more expensive than coal or gas-fired power plants (oil-powered plants are negligible here), they are much more efficient than current solar or wind generation. Solar and wind require base-power generators to supply power when the wind doesn't blow and sun doesn't shine.

As far as waste disposal goes, Yucca has been built and approved by our best and brightest scientists. The knee-jerk anti-nuclear and pro fossil fuel lobbies are holding it up.

Nuclear is the best, current, state of the art technology to produce reliable power without emitting the allegedly "polluting" CO2. (it's ok to breathe in, just don't breathe out ;)

Posted by: spamsux1 | February 13, 2010 2:30 PM
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a big hidden (out in plain sight)cost is all the spent fuel being ponded at most, if not all nuke plant sites. When it is time to close the shop --next year, or 20 years from now -- you know the folks who made lottsa money on these plants are going to pocket their profits and go home --- and once again, taxpayers will foot the bill for big corporations way of doing business.

It would be nice to take names of all who rake in profits of $1m or more so they can take responsibility for the messes they are leaving. Consider it an accruing bill for those who profit from creating big messes.

Posted by: thetravelingmasseur | February 13, 2010 12:29 PM
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Why do so many continue bashing nuclear as if today's Light Water Reactor designs are the only kind of nuclear reactor? Uranium is not the only nuclear fuel cycle possible as many here seem to think.

There is a better way here.

Scrap the Model T, uranium burners we build today and build a newer model based on the Thorium cycle. It will be heaper, safer, and sustainable.

Yes, we might someday develop fusion, but we have not despite decades of research. The thorium reactor has already been built and tested successfully.

More information can be found here:
http://home.earthlink.net/~bhoglund/multiMissionMSR.html
And here: see the archives
http://thoriumenergy.blogspot.com

Posted by: fabco | February 13, 2010 10:41 AM
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Start by eliminating all tax breaks, production credits and other government incentives for fossil fuels, then price in the external costs of pollution and military action that are currently borne by others. Suddenly non-fossil power becomes competitive.

Posted by: raschumacher | February 13, 2010 10:35 AM
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Exactly KLOKEID is this guy serious with this question? Can't have it both ways if he wants the market to choose then the market needs to choose then the industry needs some sort of guarantee that projects won't be scrapped due to green politics or NIMBYism.

Posted by: dcvtss | February 13, 2010 9:48 AM
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If competition decided our electrical energy sources, coal would be a big winner, and renewables would not be.

Posted by: billmosby1 | February 13, 2010 9:42 AM
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Yes, let competition decide. Unfortunately the government can, due to unwarranted political influence, make nuclear power economically inviable.

All you have to do is decide that you want to increase safety by a factor of ____ times. This will result in a increase in costs. Who is opposed to safety?

Those that oppose the death penalty, nuclear power, name anything, can "shut them down."

As a result, If you are investing in nuclear power, can you be sure you costs will not rise due to the regulatory goal post moving?

Thus the reason for government subsidies. Now the government has a stake in the game.

Not complicated.

Posted by: klokeid | February 13, 2010 8:30 AM
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